AMD closes the gap

New research has revealed that at the end of this years first quarter AMD boasted a market share of 13 per cent – up over two points compared to last year.

The report by market researchers iSuppli shows that AMD’s share is up by 2.2 per cent, conversely processor giant Intel shows a fractional drop in market share of 0.7 points.

A recent stabilisation of microprocessor retail prices has also prompted iSuppli to speculate that the price wars between AMD and Intel seems to have abated. So are we witnessing a resurgence in AMD’s fortunes?

The price wars between the two companies have had an adverse effect on the share margins of both companies with financiers Morgan Stanley warning investors to sell their shares in both Intel and AMD in the face of a price war which led to a 2.2 per cent drop in Intel’s share price and a 3 per cent drop for AMD. Additionally in a slightly cooler market the freezing of prices would indicate that neither company is willing to further risk profits even in an attempt to drum up sales.

Furthermore, short-term figures give a slightly different picture. Although Intel’s market share has dropped in the last year, it made gains from the last quarter of 1.2 per cent while AMD dropped 1.1 points.

In fact the biggest year-on-year losses have been from companies in the ‘other’ category, who have seen their market share squeezed from 8.7 per cent in Q1 2007 to 7.3 per cent in Q1 2008, while AMD and Intel now take up 92.7 per cent of the market. The mathematics indicate that AMD’s biggest gains have not been over Intel but over the smaller manufacturers; bringing to mind the African proverb ‘when elephants fight, it is the grass that suffers’.

So with both Intel and AMD continuing to research and develop multi-core and multifunctional processors, it is still too early to say that either company is ‘winning’. However, it is clear that AMD are achieving their growth targets, but further information will not be available until the middle of July when the two organisations report their second quarter earnings.